Fuel Price Pulse – 13th December

Robin, Customer Success Manager at The Fuel Store, shares his insights into the factors impacting fuel prices, including his predictions for fuel costs as we head into next week.

What determines fuel prices?

Wholesale fuel prices govern the price you pay for petrol and diesel at the pumps. Wholesale prices are influenced by a range of factors, including supply, demand, and pricing for crude oil, oil refinery production levels, the pound-to-dollar exchange rate, socio-economic and political factors that might impact production/demand, the margin (profit) taken by fuel retailers, and fuel duty and VAT charged by the Government.

Factors influencing fuel pricing this week

This week, fuel prices have remained relatively stable overall, with a slight drop. Here’s what has been influencing the market:

OPEC+ Production Cuts

At the start of the week, oil prices dipped. This came after OPEC+ announced an extension of their production cuts until March 31, 2025. By restricting how much oil is available, these cuts are meant to keep prices steady. However, the decision also reflects concern about weak global demand, as the market isn’t consuming as much oil as expected.

Rising Middle East Tensions

Later in the week, oil prices climbed following reports that the Assad regime in Syria had been ousted by rebel forces. This has reignited fears of instability in the Middle East, a region critical to global oil supply. Any potential disruptions in production or transport in this area can drive up prices.

China’s Economic Measures

As the week went on, prices continued to rise due to optimism about growing oil demand in China, the world’s largest importer of crude oil. Beijing announced it would ease monetary policies to encourage economic growth, which could lead to higher industrial and transport activity—and therefore greater oil consumption. Stronger policy signals from Chinese authorities have also fueled hopes for further stimulus measures in 2025, supporting market confidence.

Supply, demand and other factors

• While geopolitical tensions can cause market uncertainty – especially in oil-producing regions such as the Middle East and Russia – global economic performance can also slow demand and impact prices. 
• Oil is traded in U.S. dollars, so fluctuations in the dollar’s value impact oil prices. A stronger dollar makes oil more expensive for other currencies, potentially lowering demand. 
• Seasonal factors like winter heating demand in the Northern Hemisphere can also increase oil consumption and pricing. 

Next week’s fuel prices

Looking ahead, we expect the market to trend higher. Continued optimism about China’s demand, coupled with ongoing concerns about supply disruptions and geopolitical risks, will likely support price increases.